In global supply chain with no quick fix, companies are paying to ship air

Asia's Tech News Daily

The global supply chain crisis is not going to end any time soon, according to top executives at key companies in the trucking and cold storage sectors, but thinking about the shipping situation as a one-time event caused by the pandemic misses a larger problem. A real fix requires understanding that the global supply chain has long been inefficient and requires a better model — one which incorporates climate change as a critical risk and business mission — and that will take years to build.

How inefficient is logistics? Oren Zaslansky, founder and CEO of Flock Freight, which creates algorithms to maximize trucking loads, recently told the CNBC Disruptor 50 Summit that as ports across the U.S. deal with long wait times for vessels, and there are not enough trucks for the loads that are coming off the cargo ships, the loads that do finally hit the road as “full” often do so with plenty of empty space inside the freight truck's trailer.

Right now, there may be 10 truck loads ready to go but only one driver is available, and one-third of those trucks loads aren't close to full. That means the customer is “paying to ship air,” Zaslansky said, and that is nothing new in the sector.

Flock Freight's business model is bridging the gap between the 60%-70% that has commonly been defined as “full” in the freight trucking business, and by using proprietary algorithms getting trucks to 100% full through the concept of shared truckloads (think Airbnb for trucking). That can help to solve the truck driver shortage, but Flock Freight sees the supply chain in much bigger terms. All that air being shipped also is generating unnecessary greenhouse gases. That amounts to a lot of empty space needlessly adding to the planet's climate change challenge from a trillion-dollar-plus freight sector. Flock Freight estimates its shared truckload solution cuts “less than truckload” freight carbon emissions by up to 40%.

In 2021, Flock Freight plans to reach net neutrality in shared truckloads through the purchase of carbon offsets, but the company's CEO says building a sustainable freight model is the bigger goal.vitpho | iStock | Getty Images

Flock Freight is the freight industry's first company to make it through the B Corporation certification process, which required overcoming some preconceptions about what it does. When Flock Freight first applied to become a B Corporation — companies with business models designed to balance purpose and profits, and which are continually assessed on metrics related to workers, customers, community, governance and the environment — the logistics start-up was denied.

“You're the bad guy, creating the greenhouse gasses and burning fossil fuels. Why would you apply?” Zaslansky recalled the reviewers as saying.

Flock Freight persisted, explaining its model of using algorithms to make trucking more efficient, and when Zaslansky needed to, making the case for trucking as a key to sustainability in simpler terms: “I think you guys like eating, so let's be real.”

The company became a certified B Corp. in June 2020.

Zaslansky, who has been in trucking for much of his adult life, said while there has been a lot of focus on trucker shortages and the supply chain struggles, these are not new phenomena to those familiar with the industry. The long-standing problems which have reached a point where there are as many as one million too few truckers on the road, have just entered a phase of “extreme volatility.”

The underlying problems that lead to air being shipped will still need to be solved after this acute global shipping crisis has passed. “What we haven't figured out in the last 18 months is getting those things to line up in time and space,” Zaslansky said.

Billions invested in rewriting rules of logistics

Billions are being invested in getting the empty space out of the logistics economy in the years ahead.

Flock Freight just completed a $215 million Series D funding round led by Softbank's Vision Fund 2, a deal that reflects rapid growth during the logistics upheaval of the pandemic economy and pushed its valuation by private investors above $1 billion.

The company has grown about 13x to 14x since January 2020, as the volatility in the supply chain produced opportunity for Flock Freight, which ranked No. 42 on the 2021 CNBC Disruptor 50 list. “We have no expectation of that slowing down,” Zaslansky said of the recent growth.

Softbank had led a previous round of investment in the company less than a year ago and at that time Flock Freight had to provide growth projections. When a private company seeks money from Softbank, providing them with “big numbers” is part of the test, he said, and Flock Freight “exceeded those. We went well beyond all the projections we gave them.”

It is not alone among start-ups seeking better ways to manage trucks on the road. Former Amazon executives started Convoy, which ranked No. 12 on the 2021 Disruptor 50 list. Convoy has estimated that 80% of every freight dollar is spent on trucking, and 35% of miles traveled are “wasted,” or 72 million metric tons of CO2 equivalent emissions.

There is also Uber Freight, Next Freight and KeepTruckin, all offering new freight models with various approaches to the long-standing issues, but trucking is not the only chokepoint in logistics that is attracting increased investment.

How refrigerated railcars factor in climate

Lineage Logistics, the largest cold storage company in the world — and responsible for the preservation of the food supply chain for many of the largest food companies in the world, including Hostess and Blue Diamond — has been raising a lot of money, too, close to $5 billion in the past 12 months as it aggressively acquires companies to add to its global cold storage network.

Kevin Marchetti, co-executive chairman of Lineage Logistics and co-founder of private equity firm Bay Grove, said its funding over the past year is higher than all but one real estate investment trust, and all but four other private companies, as it has purchased 50 companies and entered 15 new markets.

Lineage Logistics ranked No. 17 on the 2021 CNBC Disruptor 50 list.

Marchetti said at the CNBC Disruptor 50 Summit that the issues now occurring across the largest ports in the U.S., from the West Coast to the Gulf and East Coasts, as well as in Asia, reinforce why it is so important to eliminate waste and be more efficient with supply chains.

Lineage is not only in the warehouse and trucking links in the supply chain, but through a $500 million acquisition has now become the largest owner of refrigerated railcars in the U.S. That can have an advantage over trucking as four truckloads can be fit in one railcar, leading to a lower carbon footprint, and also helping alleviate the trucker shortage.

Neither logistics executive expects the supply chain to right itself too soon. Marchetti said the restocking of the economy as demand booms post-Covid peak, and the holiday push at the same time, “have been crazy.” He thinks the problems can be worked through, but will take six to nine months.

That view is shared by Zaslansky, who said the supply chain issues will probably last until the second quarter of next year. Until then, it “will be the Wild West,” he said. “It keeps bullwhipping. … Just bullwhipping all over and it will take at least six months,” he added, and there is always the potential for the pandemic or natural disasters pushing out that forecast.

“We're literally living in a shipping Armageddon,” Uber Freight's chief Lior Ron recently told CNBC's Jim Cramer on “Mad Money.”

Economists have recently said the issues will last “well into 2022” and “will get worse before they get better.”

Zaslansky is fueled less by the short-term issues than remaking the supply chain to be more durable for the long term. In trucking, and for global logistics, he said that means changing the rules of the game. Instead of “iterative” change in the traditional supply chain model and modest efficiency improvements, “we will write entirely new rules,” he said.

As a B Corporation, a big part of the new rules for Flock Freight are based on building a sustainable business. The most simple ways of doing things in trucking need to be rethought, such as truckers idling in their vehicles powered by diesel while recharging their devices at rest stops.

Flock Freight has a partnership with through which it has agreed to offset 100% of carbon emissions of its shared shipping service through carbon offsets, paying the cost for shippers. The logistics company reduced 4,127 metric tons in carbon emissions in 2020 and this year will use the offsets to reach net neutrality in shared truckloads — offsetting 20,000 metric tons in carbon emissions.

But as the only certified B Corporation in the freight sector, building a more sustainable supply chain is the big business aim. Maintaining the company's B Corp. certification not only “keeps them honest,” but has also “spawned other products” that have largely contributed to Flock Freight's recent growth. And to remain a B Corp., “We have to be able to prove it with data on sustainability and growth,” Zaslansky said. 

Internet Explorer Channel Network
Asia's Tech News Daily
News Related


‘Supermarkets massively sell bottles of soft drinks without a deposit', investigation inspection

Supermarkets sell bottles of soft drinks without a deposit, while they are legally obliged to ask for a deposit. It concerns a hundred liquor bottles, often of their own private ... Read more »

'I use it for life': Mike Tyson joins the list of celebrities launching a cannabis line

In this handout image Mike Tyson attends the Hublot x WBC “Night of Champions” Gala at the Encore Hotel on May 03, 2019 in Las Vegas, Nevada.Omar Vega | HUBLOT ... Read more »

Top 10 best read on DFT: energy and houses

The prediction by a leading energy expert that the oil price will fall next year attracted most readers. There was also a lot of reader interest for a tasty interview ... Read more »

COVID-19 update | Maharashtra minister asks Thane authorities to be prepared to tackle new variant scare

Image: Twitter Maharashtra Urban Development Minister Eknath Shinde on Saturday asked Thane district authorities and local civic officials to keep hospital facilities ready and ensure strict adherence among people to ... Read more »

Tata Steel focuses on increasing iron ore production to 45 mtpa in 5 years

File image Tata Steel will focus on augmenting iron ore production from 30 million tonne per annum to 45 mtpa in the next five years, a company official said on ... Read more »

Black Friday popular, Dutch bought for record

Payment service iDEAL recorded an “absolute” daily record on Friday, of 5.39 million payments, which accounted for approximately €430 million in turnover. About 70% more was bought online via iDEAL ... Read more »

Black Friday extremely popular, the Dutch bought for record

Payment service iDEAL recorded an “absolute” daily record on Friday, of 5.39 million payments, which accounted for approximately €430 million in turnover. About 70% more was bought online via iDEAL ... Read more »

Mauritius to stop flights from South Africa from November 28 over new coronavirus variant

(Representative image) Mauritius will suspend all commercial passenger flights from South Africa from Nov. 28 due to the new coronavirus variant Omicron, its foreign affairs ministry said on Saturday. A ... Read more »

Moneycontrol PRO presents Intrazon 2.0 on Sunday, 28th November, at 8 pm, with Dinesh Nagpal on ‘Harmonics & Ichimoku Trading (HIT) for intra day'

Dinesh Nagpal | PC-MoneyControl INTRAZON 2.0 is one of the largest retail Intraday Traders Online Conferences to be organised in India. Some of the best intraday traders in India will ... Read more »

‘Black Friday popular, sold a quarter more than last year'

According to Klarna, the Dutch have been interested in the offers from the first minute of Black Friday. In the first hour, the Swedish-based company noticed a 780% increase in ... Read more »

S. Korean scientists develop hydrogen fuel engines strong enough to power industrial drones

The engine supplies hydrogen fuel through the direct spray method while optimizing engine parameters, such as spray and ignition. The Korea Institute of Machinery and Materials has developed a 5-kilowatt ... Read more »

World on alert as UK reports cases of omicron COVID variant

The Associated PressA sign reading ‘Stay safe’ in Regent Street, in London, Friday, Nov. 26, 2021. A slew of nations moved to stop air travel from southern Africa on Friday, ... Read more »

Here are the 21 recommendations out of 33 accepted by RBI on ownership, corporate structure of private banks

Representative image The Reserve Bank of India (RBI) has accepted 21 out of 33 recommendations made by an internal working group on the ownership and corporate structure of private sector ... Read more »

Small Business Saturday holiday shopping is back, and maybe changed forever

Sign on glass reading Thank You For Supporting This Local Business in a bakery in Walnut Creek, California, September 15, 2021. Photo courtesy Sftm. (Photo by Gado/Getty Images)Gado | Archive ... Read more »

Reusable gift wrap, homemade gifts: Sustainability is on the wish list this holiday season

SustainAble Home Goods sells a selection of eco-conscious products online and also offers cloth wrapping that can be reused.Source: SustainAble Home Goods Some children might be waking up on Christmas ... Read more »

Dutch test for new variant after finding 61 COVID cases among South Africa passengers

(Representative image) Dutch health authorities said on Saturday they had detected 61 COVID-19 cases among people who flew from South Africa on Friday and were now doing further tests to ... Read more »

Ship's master said he spent 50 hours sleepless before crash

NEW ORLEANS — An oil tanker hit an offshore oil platform at night off Louisiana because its Turkish operating company didn’t give the ship’s master time to recover from days ... Read more »

How Major League Soccer is positioning the sport to become a dominant one in the U.S.

Soccer in the U.S. has not always had the best track record. Its popularity fluctuates, and interest is usually tied to significant events, such as the World Cup or the ... Read more »

New Covid variant: Delhi L-G instructs officers to prepare for any emergency

Delhi Lieutenant Governor Anil Baijal Delhi Lt Governor Anil Baijal instructed senior officials to ensure strict adherence to Covid appropriate behaviour at public places and preparedness at hospitals to deal ... Read more »

Specialized travel agencies deplore South Africa flight ban

Photo: ANP The imposed no-fly zone for countries in southern Africa means another “blow blow” for specialized travel agencies. The Association of Small-scale Travel Organizations (VvKR) says in a response ... Read more »

Lululemon sued by Peloton over apparel line

Photo by: Marco Tjokro/Unsplash Lululemon Athletica has been sued by Peloton as their conflict over the latter's new apparel products escalated. The exercise equipment company headquartered in New York, New ... Read more »

Payment company Klarna: Black Friday is incredibly popular online

Photo: ANP The Black Friday bargain fest, which has come over from the United States, has proven to be “unprecedented in popularity” online. Payments company Klarna saw an increase in ... Read more »

No paid coffee break for postman, judge decides

The works council did not consider it fair that postal deliverers are not entitled to a paid coffee break of ten minutes on busy days, while other PostNL employees are ... Read more »

Despite the drop in oil prices, the Netherlands is not yet getting rid of expensive petrol

Photo: ANP The Netherlands will probably be stuck with petrol prices around 2 euros per liter for a longer period of time. That’s what market expert Paul van Selms of ... Read more »

IT dept seizes jewellery worth Rs 4 crore post raids on 2 Ludhiana real estate developers

Representative Image: Shutterstock The Income Tax department has seized over Rs 4 crore worth jewellery and cash after it raided two real estate developers of Ludhiana in Punjab about two ... Read more »

Aircel-Maxis case: Court summons P Chidambaram, son Karti on December 20

P Chidambaram (File image) A Delhi court on Saturday took cognisance of the chargesheets filed by the CBI and the ED against former Union minister P Chidambaram and his son ... Read more »

WTO postpones ministerial meet in Geneva for indefinite period due to Covid

The World Trade Organization (WTO) has postponed the ministerial level meet, scheduled from November 30 in Geneva, for an indefinite period due to an outbreak of a particularly transmissible strain ... Read more »

Cryptocurrency: Spanish officials warned Vissel Kobe's Andrés Iniesta after Binance tweet

Photo by: Executium/Unsplash Andrés Iniesta, a popular soccer player who is playing for the Japanese pro-football club, Vissel Kobe, was warned by the Spanish market regulator when he tweeted about ... Read more »

TMC 'disinterested' to coordinate with Congress in winter session, likely to skip opposition parties' Nov 29 meeting

West Bengal Chief Minister Mamata Banerjee (Illustration: Moneycontrol) The Trinamool Congress on Saturday said it is “disinterested” in coordinating with the Congress during the upcoming winter session of Parliament but ... Read more »

The Best Banks for Business in the United States.

Greetings, dear readers. Today I am going to talk about banks in the United States. This topic is quite extensive as it requires an in-depth analysis of each of the ... Read more »

Bengaluru-Patna flight makes emergency landing at Nagpur airport due to engine glitch

Representative image A Patna-bound GoAir flight from Bengaluru with 139 passengers on board made an emergency landing at Nagpur airport on Saturday after suffering a glitch in one of the ... Read more »

Holiday camp chain Butlin's to be put up for sale as staycations boom

Blackstone, the owner of Bourne Leisure, Butlin's parent company, has asked bankers at Rothschild to launch an auction of Britain's best-known chain of holiday camps next year, Sky News learns. Read more »

Workers' paradise? Portugal's new teleworking law takes flak as critics call it half-baked and unfeasible

Portugal‘s new law on working from home makes the European Union country sound like a workers’ paradise. Companies can’t attempt to contact their staff outside working hours. They must help ... Read more »

Macao detains Suncity boss after over illegal gambling

The Associated PressThe website for Suncity Group is seen on a computer screen in Beijing, China, Saturday, Nov. 27, 2021. Chinese authorities have issued an arrest warrant for the head ... Read more »

Bulk Deals | Abakkus picks 27 lakh shares of Meghmani Organics, Capri Global buys 15 lakh shares in Welspun Corp

Meghmani Organics: Abakkus Asset Manager LLP bought 27,41,787 equity shares in the company at Rs 82 per share on November 26. However, DBS Nominees Private Limited sold 46.1 lakh equity ... Read more »

China Evergrande's electric-vehicle unit gets US$200 million from returning undeveloped land

China Evergrande New Energy Vehicle Group returned several undeveloped land plots to the Chinese government in exchange for 1.28 billion yuan (US$200 million) to alleviate its cash crunch and keep ... Read more »

Lessons From PNBHFL-Carlyle Saga: SEBI moves to revamp pref allotment pricing regime

SEBI is in no mood for a repeat of the controversial PNB HF-Carlyle deal which was ultimately called off. Reuters) A month after the controversial Punjab National Bank Housing Finance ... Read more »

Procter & Gamble recalls Old Spice, Secret antiperspirant sprays over cancer risk

Photo by: Procter & Gamble Press Release Procter & Gamble voluntarily issued a recall on some Old Spice and Secret antiperspirant sprays, citing cancer risk. The presence of benzene that ... Read more »

Star Health IPO opens on November 30: 10 key things to know before subscribing public issue

Star Health IPO Rakesh Jhunjhunwala backed Star Health & Allied Insurance Company incorporated in 2006, will launch its maiden IPO in the coming week. It is one of the largest ... Read more »

China issues warrant for Suncity boss over illegal cross-border gambling syndicate

Chinese authorities have issued an arrest warrant for the head of Macao’s biggest junket organiser over accusations that he helped run an illegal cross-border gambling syndicate. Prosecutors in Wenzhou, in ... Read more »
On you will find lots of free English exam practice materials to help you improve your English skills: grammar, listening, reading, writing, ielts, toeic